Ulta Salon (NASDAQ: ULTA) reported Q1 EPS of $4.10, $2.17 better than the analyst estimate of $1.93. Revenue for the quarter came in at $1.9 billion versus the consensus estimate of $1.64 billion.

For the First Quarter of Fiscal 2021

• Net sales increased 65.2% to $1.9 billion compared to $1.2 billion in the first quarter of fiscal 2020. The net sales increase during the first quarter of fiscal 2021 was primarily due to the favorable impact in the U.S. from improving consumer confidence, government stimulus payments and the easing of COVID-19 restrictions.
• Comparable sales (sales for stores open at least 14 months, including stores temporarily closed due to COVID-19, and e-commerce sales) increased 65.9% compared to a decrease of 35.3% in the first quarter of fiscal 2020, driven by a 52.5% increase in transactions and an 8.8% increase in average ticket. Compared to the first quarter of fiscal 2019, comparable sales increased 7.0%.
• Gross profit increased to $753.8 million compared to $303.6 million in the first quarter of fiscal 2020. As a percentage of net sales, gross profit increased to 38.9% compared to 25.9% in the first quarter of fiscal 2020, primarily due to leverage in fixed costs due to higher sales; improvement in merchandise margins; lower salon expenses; and favorable channel mix shifts.
• Selling, general and administrative (“SG&A”) expenses increased to $443.9 million compared to $380.9 million in the first quarter of fiscal 2020, primarily due to higher store payroll and benefits and higher advertising. As a percentage of net sales, SG&A expenses decreased to 22.9% compared to 32.5% in the first quarter of fiscal 2020, driven by an increase in net sales.
• There were no impairment costs recognized in the first quarter of 2021 compared to $19.5 million in the first quarter of fiscal 2020.
• Pre-opening expenses of $4.6 million were consistent with the first quarter of fiscal 2020.
• Operating income was $305.3 million, or 15.8% of net sales, compared to operating loss of $101.5 million, or (8.7)% of net sales, in the first quarter of fiscal 2020. Adjusted operating loss for the first quarter of fiscal 2020 was $81.9 million, or (7.0)% of net sales.
• Tax rate increased to 24.5% compared to 23.6% in the first quarter of fiscal 2020. The higher effective tax rate is primarily due to a decrease in the benefit of state tax credits.
• Net income was $230.3 million compared to net loss of $78.5 million in the first quarter of fiscal 2020. Adjusted net loss for the first quarter of fiscal 2020 was $63.6 million.
• Diluted earnings per share was $4.10, including a $0.03 benefit due to income tax accounting for share-based compensation, compared to diluted loss per share of $1.39 in the first quarter of fiscal 2020. Adjusted diluted loss per share for the first quarter of fiscal 2020 was $1.13.

“The Ulta Beauty team delivered an outstanding start to the year, with sales and earnings exceeding fiscal 2020 and fiscal 2019 first quarter levels,” said Mary Dillon, chief executive officer. “I want to thank all our associates for their continued efforts to deliver great experiences and support our business in an environment that continues to be very dynamic.”

“We have emerged from 2020 with strong momentum in our sales trends, market share gains, and consumer sentiment,” said Dave Kimbell, president. “As increasing consumer confidence, the relaxation of restrictions, and a desire for newness drive increased engagement with the beauty category, our differentiated model, combined with our ongoing efforts to create meaningful guest connections, position us well to lead through the category recovery.”

GUIDANCE:

Ulta Salon sees FY2021 EPS of $11.50-$11.95, versus the consensus of $11.64. Ulta Salon sees FY2021 revenue of $7.7-7.8 billion, versus the consensus of $7.41 billion.

For earnings history and earnings-related data on Ulta Salon (ULTA) click here.